Americans shopped slightly more in October than economists expected, good news for retailers heading into their biggest sales events of the year but not enough to promise a surge in holiday spending. Retail and food services sales rose 0.3 percent from September and 4.1 percent above last year to $444.5 billion, the Commerce Department said Friday.
Lower gasoline prices are helping consumers spend more on retail, but the highest growth categories are cars and building materials, not general merchadise you'd expect under a Christmas tree. Economists polled by Thomson Reuters had expected sales to rise by 0.2 percent from the previous month after dropping 0.3 percent in September despite record iPhone 6 sales. Total sales from the August to October period rose 4.5 percent from the same period a year ago. However, last year’s fall and winter sales were particularly weak.
The October report is "decent," said Paul Diggle, Capital Economics economist, in a note Friday. But the 0.3 percent sales growth isn’t big enough to influence third-quarter GDP growth, he said.
"Overall, October’s retail sales numbers bode well for the crucial holiday shopping season," he said.
Sales over the 2013 holiday season increased only 1.8 percent from the previous year, the slowest increase since the end of the recession and a considerable decline from its 20-year average of 4.6 percent, according to FTI Consulting. Since late 2013, sales have slackened in nearly all product categories but particularly specialty apparel, as millennials shift discretionary spending onto electronics.
“Retailers are stepping into this season with a stronger macroeconomic environment compared to a year ago, but the aggressive year-round discounting we have witnessed since 2013 is part of a new reality for the industry,” said Bob Duffy, global leader of FTI Consulting’s retail and consumer products segment.